Altruistic Capital: Harnessing Your Employees’ Intrinsic Goodwill

Everyone comes to the table with some amount of "altruistic capital," a stock of intrinsic desire to serve, says professor Nava Ashraf. Her research includes a study of what best motivates hairdressers in Zambia to provide HIV/AIDS education in their salons.

by Carmen Nobel

"Work done in the spirit of service is the highest form of worship." —Abdu'l-Bahá

The field of economics is rife with the concept of "capital." There's financial capital—cold hard cash or cashable assets. There's fixed capital—the buildings, machines, and factories that enable productivity. There's human capital, which measures the economic value of an employee's skill set and intellect.

And now there's a new member of the capital lexicon: altruistic capital.

"Altruistic capital is the idea that every individual has within them an intrinsic desire to serve," explains Nava Ashraf, an associate professor in the Negotiation, Organizations & Markets Unit at Harvard Business School. "In an organization, all the employees already have some of this, in varying degrees."

“Altruistic capital is the idea that every individual has within them an intrinsic desire to serve.”

A behavioral economist, Ashraf developed the idea of altruistic capital while conducting experimental field research for various global nonprofit organizations. But she believes that her findings on the subject will yield important lessons for the private sector, as well. "As a manager, how you organize the work, and how you incentivize, can increase or deplete the amount of altruistic capital."

Ashraf's interest in international field research sprouted from the realization that the people tasked with solving global problems aren't always in touch with the reality on the ground.

During a summer at the World Bank, she worked on Moroccan agricultural policy with a team of consultants. "I was just an intern," Ashraf says, "but as I looked around the boardroom I realized that not one of these people had ever actually talked to a farmer in Morocco. And yet they were designing a rural development strategy for the whole country."

Suspecting she could help people better if she actually met them, Ashraf sought out field research volunteer opportunities, packed her bags, and flew to the Ivory Coast (where she helped found the Rural Women's Training Institute in 1998).

"What I realized was that everything I had previously learned about development seemed to be conflicting with what I was seeing in the field," she says. "I kept seeing situations in which people might seem to have access to various supplies and technologies, but they weren't able to take advantage of them for numerous reasons. It felt to me like a tragic situation that potentially could be solved with a bit more insight into how people actually make decisions, the structure of their constraints, and what really affects their behavior."

Thus launched an academic career in which Ashraf challenges (and sometimes disproves) popular economic theory with field experiments. "Field experiments give you scientific rigor while being close to practice," says. "Unless you really have a bulletproof argument that you can't poke holes in, it's hard to change prior beliefs."

Case in point is her research on performance incentives.

The Power Of Measuring Social Impact

Historically, economists and firms alike have banked on the theory that workers are motivated by earning financial incentives and boosting revenues. And in designing development projects for developing countries, nonprofit organizations tend to follow this theory, too.

"This is the traditional private-sector approach," Ashraf says. "The assumption is that if you don't give someone a stake in the profits of the organization they won't feel that they have a mission."

The practical problem with the theory is that many organizations, such as social service agencies, simply can't afford to motivate their staff with monetary bonuses. Moreover, a growing body of research indicates that corporate workers are very motivated by nonmonetary incentives, such as positive recognition from their peers. (See, for example, The Most Powerful Workplace Motivator.) Ashraf speculated that organizations could motivate employees simply by showing them how their work helped others—in other words, by harnessing and increasing their altruistic capital.

In December 2009, the Society for Family Health (SFH), an affiliate of Population Services International in Lusaka, Zambia, agreed to collaborate on a field experiment with Ashraf and two colleagues, Oriana Bandiera of the London School of Economics and Kelsey Jack of Tufts University. SFH had established a new program in which hairdressers provided HIV/AIDS education and sold female condoms at subsidized prices in their salons. The AIDS epidemic is especially dire in Zambia, where some 14.3 percent of adults (ages 15-49) were infected with HIV in 2010, according to government data. And HIV/AIDS is spreading fastest among married heterosexual couples.

Ashraf explains that hairdressers were ideal educators and distributors for three key reasons: One, they tend to have unusually familiar relationships with their clients, whom they see repeatedly throughout the year. Two, a client sitting still for a haircut is a captive audience. Three, while there is a dearth of health officials in Zambia (the entire nation employs only 6,000 nurses), there is an abundance of hairdressers: a 2010 census by the research team found more than 2,500 salons in Greater Lusaka, serving a population of about 2 million. The team aimed to suss out the best way to incentivize hairdressers to distribute female condoms, which, barring abstinence, are the best-known way for women to protect themselves from HIV.

The researchers randomly chose a sample of 1,222 stylists (who were unaware of the experiment) and divided them into four incentive groups. The control group received no incentives at all; the hairdressers were purely volunteers. The small financial margin group received a 10 percent margin (50 kwacha) over the retail price for every condom pack sold. The large financial margin group received a 90 percent margin (450 kwacha) over the retail price.

In the nonfinancial reward group, each stylist received a large paper thermometer, like those often used in fundraising campaigns, to hang in her salon. Each condom sale garnered a star stamped on the thermometer, providing a visual measure of the stylist's contribution to AIDS prevention in her community. Hairdressers who sold more than 216 condom packs during the yearlong study period were invited to an awards ceremony, along with five guests of their choosing, where they would be congratulated by a well-known Zambian health official.

On average, the nonfinancial reward group sold twice as many condoms as hairdressers in the other groups. Ashraf notes that many stylists continued to work just as hard even when it was clear that they would not reach the awards ceremony threshold within the time period.

The star-stamped thermometer proved especially effective for those hairdressers who demonstrated dedication to HIV prevention by volunteering some of their training earnings to a local HIV charity—those who started out with the most altruistic capital. (The authors provide a detailed account of their findings in the working paper No Margin, No Mission? A Field Experiment for Incentives for Pro-Social Tasks.)

"Qualitatively, the hairdressers [in the star group] told me they would look at that chart and feel proud of their contribution to the cause," Ashraf says. "What was top of mind was their contribution to the social impact—in this case, protecting women from HIV. I think we've deeply underestimated the desire of individuals to serve others, in general, but especially in developing countries. And we've underestimated how the kinds of incentives we provide can either destroy that stock or leverage it."

Recruiting Altruistic Capitalists

In 2010 Ashraf was part of a research team that helped the Zambian government with a nascent national program to recruit, train, and employ community health workers throughout the country. The goal: to employ 5,000 new community health workers by 2015. The challenge: how to recruit a high-performing, dedicated workforce. "They were worried about what happens when community workers start to see themselves as government employees, whether they would maintain a connection to the local community," Ashraf says. "At the same time, they wanted to recruit the health workers who would do the best work."

The team's field experiment involved launching two separate recruitment campaigns, each targeting half of 48 randomly selected rural districts across the country and distributing marketing material in the nation's health centers. In 24 districts, potential employees were wooed with posters and brochures emphasizing community service. In the other 24, the material emphasized career advancement. "Importantly, neither [campaign] talked about salary," Ashraf says. "All that changed was emphasizing different aspects of the same job. But by framing the task differently, we actually presented a different mission."

Indeed, the two campaigns drew two distinct groups of candidates. While the career advancement campaign attracted a group that had more qualifications and was more technically knowledgeable, the community-focused candidates were deemed more reliable—more likely to fulfill all application requirements, for example, and to show up at interviews when invited. The government deliberately hired candidates from each group.

It's too soon to gauge which group will yield the best performers, since the candidates have just started working. But the initial results offer useful lessons for hiring managers everywhere. "By emphasizing some aspects of the job over others, you can draw a different pool of candidates and potentially create different levels of performance," Ashraf says. "And as a leader you can help every individual to accumulate more stock of altruistic capital by showing them the social impact of whatever they're doing."

Work In The Spirit Of Service

The quest for social impact has been a driving force in Ashraf's life since she was a little kid. Her family fled Iran during the 1979 revolution, escaping religious persecution. Nava was three. "I grew up very aware of this broader world in which, with the flip of a coin, I could have been raised under a chador, not able to have an education, not able to actually do any of the things that I've been able to do in my life," she says. "And so I really wanted to figure out how to bring these opportunities to others."

Asked whether faith plays a role in her work, Ashraf nods hard. A quote from religious leader Abdu'l- Bahá, son of the founder of the Bahá'í Faith, Bahá'u'lláh, inspires her daily: "Work in the spirit of service is worship."

But religion is also an important aspect of the lives she studies and serves. "It's an enormous, underestimated lever," she says. "I see so many ways in which it's the most fundamental lever for motivation and behavior—in so many countries and for so many individuals. In an increasingly globalized world, it's more important than ever to acknowledge the role that plays for so many people. It's such a strong force in Africa, Latin America, Southeast Asia. Most microfinance groups start with prayer."

That said, she acknowledges that coming out as religious can be daunting for any academic, let alone an economist. "To be an academic means that you put reason on a very high pedestal, and it should be," she says. "The search for meaning is something that many intellectuals don't let themselves explore, because they feel like it would be against reason. But it is tragic if we feel that reason and faith cannot go hand in hand."

About the Author

Carmen Nobel is the senior editor of Harvard Business School Working Knowledge.

Janie Goldstein

Executive Director, Upside Foundation of Canada

I totally agree with the power of altruistic capital. That is one of the reasons behind the recent founding of the Upside Foundation of Canada (www.upsidefoundation.ca). The Foundation enables Canadian enterpreneurs donate a small portion of their options to charities so that once the company has a successful exit, their upside can be shared with community members in need. We believe that employees of the startup companies will be more motivated to make their start-up a success. By achieving the growth and profit goals of the start-up, they are helping to improve the lives within their communities. Just look at Tmura in Israel to see what a powerful motivator it has been there.

Anonymous

I work in a large american global non profit. The culture is totally Money driven and top down. We Americans will tell you poor people what is good for you. Do it for free while we in the organization get paid for it. Altruism is short lived phenomena. Please don't peddle volunteerism as the next magic bullet. It's not

Nava Ashraf

Associate Professor, Harvard Business School

I completely agree that volunteerism is not the next silver bullet (and it can be unfair to expect people in developing countries to work for free!); note that in our study, the pure volunteers did no better than any other group. It was the group who was able to track their social impact, through the social rewards, that had the highest performance. The idea is not to exploit the desire to serve others by making people work for free, but rather to consider this other form of motivation that runs through individuals and design rewards and incentives to help encourage and leverage that.

Heather Lord

Philanthropy Geek, www.PhilanthroMeme.com

Question: While I realize that isolating "altruistic capital" as a separate layer of the capital taxonomy may be beneficial for research purposes and to focus attention on nonmonetary incentives, from a purely philosophical standpoint couldn't altruistic capital be seen as a subset of human capital? If not, why not and how do you see the relationship between these two forms of capital?
(In other news, gave you a shout out on my blog: www.PhilanthroMeme.com)

@gregnazvanov

Leader, Unborn Leaders

Love the article, it is exactly what leadership is.

Anonymous

Just something that I think we should take note of in terms of African culture, the concept of "ubuntu" which means "I am what I am because of who we all are.". Is this not a possibly an explanation of why the research indicates such. Can this be applied to the western cultures who have been indoctrinated with the capitalist culture of "greed is good"

Kapil Kumar Sopory

Company Secretary, SMEC(India) Private Limited

Altruistic Capital is hidden within each one of us. What is needed is to bring it out for doing self-less service to the community so that a better life for the needy results.
I recall an incident where we were in a seminar on poverty alleviation when a speaker lamented that people who have no idea of poverty are engaged to discuss it that too in a posh five star atmosphere. He was rightly of the view that it is better to first do groundwork by moving to such pockets, finding out and then analyzing the problems so that viable recommendations could be made for implementation.
We need to focus on our inherent spiririt of service which incidentally is also the idea behind Corporate Social Responsibility.
The laudable service being rendered by the barbers is a great example and similar ones could be endeavored by other communities.
More often, plans made at apex levels fail to take off at the implementation stage due to lack of research on the basics before engaging in such exercises leading to avoidable waste of scarce resources - time, energy and money.
At such a young age, Nava Ashraf is doing very laudable work which all of us also need to take on.

Atul Guglani

Director, Mantex Technologies

I am not sure, if Altruistic Capital can harness employee intrinsic goodwill, but giving away is a fuller satisfaction for most of us and hence is a natural reward. Most of us, outside the job are associated with some or the other community service, or Church or support group or charities etc and we consider internally the build up of this Altruistic Capital.
For a commercial organization, recognizing such a service is generally not desirable , as then employees rather then delivering the goods and services within the company , spent more time in finding heroism in altruistic activities . Specially, if somehow, the altruism as a service further gets associated with religion and God as a natural extension.
For NGO and for Not For Profit, the Altruistic Capital is the Ultimate capital.
Altruistic Capital like any other capital should be a resource and even if virtual values are given to it, the intrinsic strength will show up. Say, a community service program gives points for the number of hours serviced and updates a file like the frequent flyer to bring him to Silver, Gold member and gives him coat Pin Ups etc and shares the success stories of Altruistic members. Perhaps, the capital will find its economic value.

Nilya Dutt

Student - Psychology Under Gradauate, Gargi College, New Delhi

Interesting read. Your article work me up from my sleep. Easy to understand.

Your article revolves around the research in developing nations. My question to Nava is : whether the same findings would apply to developed nations. Would the concept of of altruism capital differ according to cultures - that is individualistic vs. collectivist cultures.

Individual's desire to serve appears meaningful as altruistic capital from the point of view of an organization in an economic sense. Equally meaningful would be 'intrinsic' altruism as a human quality and motivational factor from psychological angle. Viewing altruism from this perspective. I happen to develop a conceptual framework of intrinsic altruism along with innate divinity and basic goodness constituting Transformational human values. Empirical evidence, however, suggests that compared to innate divinity and basic goodness, intrinsic altruism is perceived to have been adhered to less. As a corollary, perhaps, compassion, very similar to altruism, as a human value is almost shied away to be discussed as a desirable managerial quality in corporate culture.
G.P.Rao.

Dean Pulliam

Volunteer Membership Secretary, Forty-Plus of Central Ohio

Thank-you for casting a moniker upon "altruistic capital" so it can be openly and clearly discussed and analyzed. "It" (this element of altruistic capital) is one of the core factors I've sought in each new-hire over the last four decades as a manager. During employee recruitment interviews I would probes for such a factor, but lacked vocabulary to describe or name "what" I was seeking. However, every time I found "it" within some one, and hired the applicant, my organization benefited from an exemplary team member. Keep studying this factor...and reporting your results!

Connie Carter

Professor, Royal Roads University, Canada

Thank you for this insightful article. I am currently teaching an undergraduate course called 'Doing Business in a Global Economy' and was astonished to find that, having discussed topics such as 'Born Global', International Volunteering, global Non-profits, Intenrational Social Entrepreneurship, and so on, over 70 per cent of my students want to volunteer to work abroad. For free. For the experience. And yes, just to help those who are less fortunate than themselves!
I shall add a disucssion of 'Altruistic Capital' as part of our debate in management theory in entrepreneurship. Thanks for identifying and labeling what we all know exist.

Bhargavi V.R

Assistant Professor, Seshadripuram College, Bangalore

Excellent article, with a touch of truth.

Ashiyan Rahmani

Lecturer/Graduate Student, Honolulu Community College/Oxford University

Dear Nava
This idea that altruistic motives have a positive influence on productivity and outcomes can also be seen in a number of other sectors. One example that i am familiar with, is the technology sector, if you look at for example, the open source movement or creative commons. I feel that there is a strong connection to the desire for 'happiness' and 'social progress' and that altruistic endeavors serve this purpose. This recent article on CNN also gives an example of this. (http://www.cnn.com/2013/01/24/business/le-meur-leweb-davos/)
Thanks
Ash

Nava Ashraf

Associate Professor, Harvard Business School

Great to hear everyone's comments and questions. To answer a couple:
1. I do think this is universal, ie applies to developed and developing countries, but just like certain employers or organizations can nurture and foster this drive in us, so can certain cultural norms and customs.
2. We usually think of human capital as a set of capacities and skills; altruistic capital is more like an impulse, a drive, a motor. They are both portable--we take them with us wherever we go-- can be invested in and can be depleted (although it's harder for human capital at an individual level to become depleted); and they both exist at the individual level, but they can be aggregated within an organization. In the end, this is just a way to talk about this source of motivation, and to bring to the surface how important it can be to consider it when designing work.

In my field work with over 300 companies (many of which are in developing nations) over the last 10 years, I find that the apparent tension between "for good" and "for profit" is reconciled IF one has the right Purpose. People will give their all for the right purpose, not just to feel good. If the Purpose is noble enough and the stakeholders are broad enough, then the profits will also be enough. Given a choice, I would rather do good through a business than through an entity that takes money from business to do good works. (This does not work 100% of the time, but more often than one would think.)
As a famous teacher said, "Do business until I return."

Premanathan

Prof, DCSMAT

Good article. This phenomenon of altruism is explicit in the eastern culture for example the theory of Nishkama Karma propounded in Bhagawad Gita.

Sarah Arnold

I couldn't agree more with the idea of field input into decision-making. Check out a documentary called "Where's My Goat". The filmmaker bought a goat through PlanCanada and then went to Africa to see what happened. He encountered lots of committees telling him what was really needed and that a goat didn't really solve the problems. Until finally he went out to the villages, and met the community workers and the recipients of the goats. The actual difference it made in their lives and livelihoods was incomparable.

Charles Mwale MBA,MPA

CEO, Vision Leadership Institue International

This is a good research paper. Thanks to Nava Ashraf for highlighting the importance of doing research on the ground, with the people in question.
The idea of "Atruistic Capital", is important because as Maslow's hierarchy of need indicate, it gives individuals a sense of belonging. When people participate in the community, they feel to be a part of it. In my case, when I got involved in my community in last year's general elections as an election inspector, it gave me a great sense of personal value that can not be equated to any dollar amount. In my opinion, it is important for employers and community leaders to scout for ways they tap into this resource.

Nsisuk Ekanem

Board Chair, Nsisuk O. Ekanem Initiaitive Foundation

The coinage 'Altruistic Capital' caught my attention as soon as I came across it while scanning through my mails. I operate an NGO that is enabling enterprising youths and women in Africa to set up small scale enterprises. Recently, I have encountered two newly employed salaried workers in our team with an incredible deposit of what could be best described as 'Altruistic Capital'. Ravished with delight by their extra commitment to service which even financial reward cannot afford, I eagerly desire a means of recruiting more of these class of employee to work in a newly built Table water factory. Evidently, high productivity is guaranteed with a workforce lavished with 'Altruistic Capital'. Now I got a clear insight and direction. Thank you Nava Ashraf for your inspiring work.